Microsoft Secures 194 Billion Dollar AI Cloud Deal with Nebius

Microsoft has entered into a significant agreement with Nebius, a provider of AI infrastructure, to purchase cloud computing capabilities. The deal, valued at up to 194 billion dollars, spans until 2031 and involves Nebius supplying dedicated GPU infrastructure from its data center in Vineland, New Jersey. The GPU services are scheduled to be deployed in multiple phases starting from 2025 and 2026. This agreement is a strategic move for Microsoft, which has been facing a persistent shortage of AI cloud computing capacity. The deal allows Microsoft to secure additional resources to meet the growing demand for its AI services, including those provided under the Azure brand. Nebius, which was spun off from the Russian internet giant Yandex, will benefit significantly from this agreement, receiving 174 billion dollars upfront, with an additional 20 billion dollars in potential services through 2031. This financial injection will enable Nebius to expand its AI cloud business more aggressively by 2026. The company, backed by investors including NVIDIA and Accel Partners, is leveraging the current AI boom to grow its data center operations. The agreement also highlights Microsoft's ongoing efforts to address its capacity constraints, as the company continues to invest heavily in new data centers and high-end server equipment. Despite these investments, Microsoft's chief financial officer has indicated that the company will continue to face capacity limitations through the end of the year. This deal is part of a broader strategy for Microsoft to secure additional AI computing power, as it also has contracts with other providers like OpenAI and CoreWeave. Nebius, founded in 1989 and headquartered in Amsterdam, has been expanding its presence in the United States, opening offices in San Francisco, Dallas, and New York. The company aims to support innovative AI startups and enterprises in the region. The agreement with Microsoft is expected to drive significant growth for Nebius's AI cloud business, but the company is also exploring additional financing options to achieve even faster expansion. Nebius plans to cover the capital expenditures related to this deal through the cash received from the agreement and debt secured by the contract. The company is evaluating multiple financing strategies to accelerate its growth beyond the current plan and will update the market on its financing approach at an appropriate time.